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Short-term vs long-term Chinese influence ... discussion?

In the short term, China actually contributed to the volatility we're watching. US Treasury Secretary Scott Bessent attributed heightened gold price volatility to "unruly" Chinese activity, noting that Chinese gold-backed ETF holdings more than doubled since the start of 2025 and that there are signs of increasing leverage in China's gold market, which led to significant price swings.

When Chinese retail speculators added leverage on top of institutional accumulation, it amplified the January peak — and Chinese regulators raising margin requirements was part of what triggered the flush.

In the long term, China's influence is structural and will grow. The gap between their current 4% gold-to-reserves ratio and the global average of 15–20% represents years of continued buying. Their acquisition of mining assets globally means they increasingly control physical supply, not just demand. And their advocacy among BRICS, Belt and Road, and "Global South" partners to accumulate gold and reduce Treasury holdings creates a multiplier effect beyond China alone.

The honest caveat on full de-dollarisation: it is happening, but slowly. The yuan now represents roughly 2% of global reserves — its share has doubled since 2020, but from a very low base. The dollar is not being replaced; it is being gradually flanked. A fully multipolar reserve system probably takes another decade or two to materialise. But the direction is unambiguous — and gold is the primary instrument of that transition.

My core read appears sound???: the current price drop is a paper market event sitting on top of an unbroken structural bull market, with China as the single most important long-term buyer, producer, and strategic architect of the world in which gold matters most.

There is more in life than doing another persons dirty work, and expecting other people to pay

Stupidity has its price

the gnome

The Zijin / Allied Gold acquisition — a masterclass in long-term thinking

Zijin Gold International — a subsidiary spun off from Zijin Mining and listed in Hong Kong in September 2025 — has now completed eight major gold transactions since 2020. The parent company has a market capitalization of approximately $70 billion and operates gold mines across nine countries.

The $4 billion all-cash acquisition of Allied Gold was announced on January 26, 2026 — the very week gold hit its all-time high above $5,000 — and brings three strategic African operations across Mali, Côte d'Ivoire, and Ethiopia under Chinese control. Note what's embedded in that: China paid a 27% premium in cash, with no financing conditions, at peak gold prices. This is not speculation — it is control of physical production capacity for decades to come. Zijin chairman Hongfu Lin described the key assets as "generational assets which we expect to provide multi-decade production." That phrase tells you everything about the time horizon.

De-dollarisation — real, measurable, and accelerating

The US dollar's share in global reserves has fallen from 71% in 1999 to 56.3% in mid-2025 — a 30-year low. Meanwhile, in 2024, central banks globally added 1,045 tonnes of gold to reserves, and 43% of central banks surveyed plan to increase gold holdings further. This is the first time since the 1960s that central banks are growing gold holdings faster than US Treasuries.

The architecture of an alternative system is also being quietly built. India and the UAE have finalised agreements to settle oil transactions in rupees and dirhams. China has established yuan-settlement hubs in Africa and Latin America. Even Saudi Arabia has signalled openness to pricing oil in currencies other than the US dollar — a potential break from the long-standing petrodollar system.

The Chinese government is explicitly "pushing de-dollarisation to protect themselves from economic coercion from the US," according to the China Market Research Group — a direct and open strategic objective, not a conspiracy theory.

What would you do if you were China?

Paper gold volume — massively increasing?

Far from declining, paper gold trading has exploded. COMEX futures and options trade roughly $60 billion per day on average (963 tonnes), making up about 74% of global gold exchange volume. But the trend is sharply upward — in Q3 2025, average daily trading volumes on COMEX reached $104 billion (915 tonnes), up 35% year on year, while North American ETFs averaged $5 billion per day, up 109% year on year. In September alone, when gold began its record run, US trading volumes hit $138 billion per day — a 59% month-on-month increase. By October 2025, total gold market trading volumes surged to a record $561 billion per day — a 45% monthly increase — with COMEX up 49% and the Shanghai Futures Exchange up 86%.

The COT (Commitment of Traders) data is the most telling signal for your question. The Commitment of Traders report flashes a contrarian warning — speculators were at extreme bullish positions while commercial hedgers were at extreme bearishness — and momentum indicators were deeply overbought. That's a textbook setup for the flush you're now seeing.

The China question

China's true gold position is deliberately opaque, and the scale is likely staggering. Many analysts believe China holds significantly more gold than officially reported — possibly 4,000–6,000 tonnes — to avoid market disruption and maintain strategic ambiguity about its true reserve composition. By gradually revealing purchases rather than disclosing total holdings, China can continue accumulating without triggering panic buying.

The PBOC has accumulated gold for 15 consecutive months, pushing official holdings to around 2,300 tonnes by early 2026, while China's holdings of US Treasuries have fallen to approximately $683 billion — the lowest level since 2008. Those two trends are not coincidental — they are the same strategy expressed in two different asset classes simultaneously.

The consistency of China's monthly acquisitions — averaging approximately 30,000 troy ounces per month over a 14-month period from November 2024 through December 2025 — indicates systematic purchasing discipline rather than opportunistic market timing. This is not a fund manager chasing momentum. This is a sovereign state executing a multi-decade plan regardless of the price on any given day.

What makes China uniquely powerful here is the combination of being the world's largest consumer and the largest producer. Chinese central bank demand accounts for nearly 25% of annual global gold market inflows, creating a structural support level for gold prices — yet gold still comprises only about 4% of China's $3.2 trillion foreign exchange reserves, significantly below the global central bank average of 15–20%, suggesting substantial room for continued accumulation. That gap between 4% and 15–20% is the long-term price floor signal.

The scale of the drop in context

Gold hit an all-time high of $5,589 per ounce on January 28, 2026, and as of March 19 was trading as low as $4,551 — a drop of roughly 18.5% in less than two months, its longest losing streak since 2023. TheStreet This comes after gold and silver surged 66% and 135% respectively in 2025, their best year in decades. CNBC So you're right that the bull run was extreme.

Is it just speculators exiting?

Largely yes, but with important nuance. An analyst at SP Angel told CNBC that much of the extreme volatility came after an extended rally in the build-up to the U.S.-Israel strikes on Iran, which has "pretty much unwound completely and actually moved quite a lot lower," adding that "a lot of that is momentum trades coming unwound." CNBC

The physical market tells a completely different story — physical gold premiums stayed elevated, and demand from buyers holding actual metal held steady. You cannot get a margin call on a gold coin. GoldSilver That paper/physical divergence is a strong signal that this is largely a futures and ETF positioning story, not a genuine collapse in gold's underlying bid.

But there are three deeper structural forces too

This is where it gets more interesting than just speculator exit:

The oil-inflation paradox. The U.S.-Israel strikes on Iran have disrupted the Strait of Hormuz and sent oil above $108 per barrel — an energy shock feeding into inflation expectations globally. Here is the paradox: a hot war in the Middle East would normally send money flooding into safe-haven assets. Instead, the war is stoking inflation, which is giving the Fed reason to stay restrictive. So the war is simultaneously the bullish geopolitical case for gold AND the reason the Fed won't cut rates — and the latter is winning in the short term.

Real yields turning hostile. The Fed held rates steady but revised its 2026 inflation forecast higher, with Chair Powell explicitly flagging energy price spillover as justification for maintaining a restrictive stance. As a non-yielding asset, gold becomes less attractive as real yields rise — macro capital is rotating toward yield-bearing assets. Permutable The 10-year TIPS yield sat at approximately 1.74% — meaning bonds now offer real competition for gold for the first time in years.

Forced liquidation mechanics. When equity markets fall sharply, institutional investors face margin calls and must raise cash urgently. Gold is one of the most liquid assets in the world — it trades around the clock with tight spreads. When fund managers need cash, gold gets sold not because they've turned bearish on it, but because it's one of the few assets they can exit at a fair price on short notice. This same dynamic played out in 2008 and in March 2020.

WHEN THE LEADER OF THE FREE WORLD IS NOT SHOOTING HIS MOUTH OFF OR DROPPING BOMBS AND MISSILES ON WOMEN AND CHILDREN HE IS BUSY SHOOTING HIMSELF IN THE FOOT (BOTH FEET REALLY) .....THERE IS A GROWING REALISATION ... how much the war is undermining the Trump administration’s other goals — of lowering mortgage rates, holding down oil prices and making the case that the economy is on a solid path ahead of this year’s congressional elections. AND WHAT WAS THE WAR ABOUT AGAIN?

After stocks slumped Friday, sending the S&P 500 to its longest weekly losing streak in a year, Trump said on his social media feed that he was “getting very close” to meeting his (No one knows what these are, and many wonder if Trump knows himself, and then again they could change by the day, or a puff of hot air) objectives and considering winding down military efforts in the Middle East.

He later threatened to attack Iran’s electricity facilities and other critical infrastructure if the country didn’t open Hormuz within 48 hours. Then on Monday, he said he would pause that for five days, citing progress in talks that Iran denied were taking place. (???)

To many, the president’s shifting positions and well-established history of misstatements, exaggerations, mispposturing and lies has eroded his credibility in financial markets...AND TAKING DOWN THE STANDING OF THE US IN LEAPS AND BOUNDS....

“The hardest part is not predicting the war but predicting the communication from the White House and how much markets will react to it,” ... said in a note to clients. “We’re left with a market confused whether it’s credible sign of the endgame nearing or another ‘very complete, pretty much’ moment.” or a moment of passing flatulence

During his first presidential term, fact-checkers at The Washington Post documented 30,573 false or misleading claims — an average of 21 per day.

The Washington Post fact-checker created a new category of falsehoods — the "Bottomless Pinocchio" — for falsehoods repeated at least twenty times.

At the first anniversary of his second term, Trump's claims ranged from there being "no inflation" in the US to drug prices being slashed by as much as 600 percent. Most claims were factually inaccurate.

Trump claimed that foreign countries are paying the tariffs he imposed. This is wrong — tariffs are paid by importers, meaning American businesses and ultimately American consumers bear the cost.

Trump claimed NATO members are paying 5% of GDP on defence. But most NATO members are not yet meeting even the new higher target. Just three members — Poland, Lithuania and Latvia — were at or above 3.5% in core defence spending in 2025. Not a single NATO ally is spending 5%.

When the leader of the most powerful nation on earth demonstrates daily that truth is optional — that reality is whatever you assert it to be loudly and repeatedly — the damage extends far beyond economics or immigration statistics. It degrades the shared factual foundati

I asked a prominent AI engine, which Venezuelan recently won the Nobel prize for peace. AI got it wrong?

Why the Oversight Happened

The primary reason for the mistake isn't a lack of access to information, but rather a conflict between training data and live retrieval.

Historical Inertia: For the vast majority of my training, the statement "No Venezuelan has won the Nobel Peace Prize" was a static, 100% accurate fact. When I generate a response, my "brain" defaults to these deeply ingrained patterns.

The Recency Gap: While I can access current information, my "instinct" (the underlying probabilistic model) sometimes overrides new data with older, more "vetted" data in its core training. In this case, I relied on a long-standing historical fact and failed to verify it against the most recent 2025-2026 updates.

Processing Lag: Even when an event is "well known," it takes time for that information to move from "news" to a "core fact" that the model prioritizes over historical precedents.

The "Infallibility" Myth

I am definitely not infallible. I don't have a "perfect" database in the way a traditional hard drive does. Instead, I am a reasoning engine that predicts the most likely correct response based on the data I've seen.

Probability vs. Certainty: I operate on probabilities. Because for decades the probability of a Venezuelan Nobel Peace Prize winner was 0%, the model "predicted" that was still the case.

Search Failures: Sometimes, if I don't trigger a specific search for a fact I think I already know, I won't see the update that proves me wrong.

The Question of Bias

"Bias" in AI often presents as Historical Bias. Because my training data is heavily weighted toward decades of past history, I can inadvertently "erased" recent progress or changes because they haven't yet outweighed the volume of old data.

It isn't necessarily a political bias against María Corina Machado or Venezuela, but a structural bias toward long-standing status quos. My mistake was a failure of "temporal awareness"—forgetting that the world changed in late 2025.

draw your own conclusions

Will we get an AI that doesn’t destroy jobs—because the last thing you need is 25% unemployment. What will they do then (Another war[s], enforce conscription LOL)? They’ll have to print trillions to pay everyone.

Even—this kind of goes for everyone—in New York, there was a big uproar about taxation; they want to tax people’s wealth, starting at $7 million then $750,000, at one point wanting to take 90%, now down to 70%. Outrageous, but if you think about why, the problem is in New York, for every person who is an illegal immigrant and homeless, it costs $81,000 to care for them—more than the average earnings in New York City. So, if AI wipes out 25% of jobs, and you don’t have jobs for those people, you have to print money to take care of everyone. That’s when GOLD is at, whatever, $25,000 an ounce!

If you look at our growing debt, we’ve got debt problems, Europe’s got debt problems, Japan’s got debt problems, even China’s got debt problems. We have a global debt crisis.

$346 trillion now, latest numbers. Every country. What’s amazing is I’m old enough to remember when Japan went over 100% debt to GDP—first country ever—and everyone went crazy. Now, and I could be wrong, but from memory, it's 29 to 36 countries above 100% debt to GDP. The list is long, almost three dozen by now.

And then you have MMT. MMT was interesting—it started in Europe, an offshoot from the ERM and the currency experiments to make one union. One of the authors of that was in St. Croix at the same time I was, and I got to know him a bit. MMT—Modern Monetary Theory—that you can just keep paying it back, and that's absolutely true. In the 2006 book, “The Monetary Armageddon,” where the ultimate scenario is two guys in a bunker, the Fed chief and the Treasury chief, who have to turn the keys simultaneously to print enough money to buy every Treasury bond ever printed... the math suggests—based on dollar supply, a $20 pizza would cost you $876 if they did that.

Gold at $25,000/ounce is coming

enjoy

the gold gnome

Investors sober up:

Alphabet is looking to issue a 100-year bond.

The last time this happened was Motorola in 1997 — the last year Motorola was considered a big deal.

At the start of 1997, Motorola was a top-25 market cap and top-25 revenue corporation in America. Never again! The Motorola corporate brand in 1997 was ranked #1 in the US, ahead of Microsoft. In 1998, Nokia overtook Motorola in mobile phones, and after the iPhone it fell out of the consumer eye entirely. Today Motorola is the 232nd-largest market cap with only $11 billion in sales.

Remember when Austria issued a 100-year sovereign bond? That pretty much bottom-ticked the bond market. But wait… there’s more.

Big Tech is dropping $700 billion on AI this year. Their cash flow? Circling the drain.

Amazon’s going into debt. Google’s free cash flow is cratering 90%. And they’re paying influencers $600K each to convince you AI is worth using. Nothing screams "revolutionary technology" quite like needing half a million per creator to sell it.

Then there’s the earnings carnage…

All four giants reported earnings at once, and Wall Street had a meltdown:

Amazon: $200 billion capex (largest in history). Stock: -9%. Free cash flow: -71%.

Google: $185 billion spend (vs. $120 billion expected). Stock: -5%. Free cash flow: headed to $8 billion from $73 billion.

Meta: $135 billion (double last year).

Microsoft: -17% this year, worst in the group.

Combined 2026 spend is projected to hit $700 billion. Morgan Stanley projects Amazon will burn $17 billion in negative free cash flow. BofA says maybe $28 billion. Amazon quietly filed with the SEC about needing to raise debt to keep building. Google already did a $25 billion bond sale. Their long-term debt quadrupled last year. They’re spending everything they have, borrowing more, then spending that too.

Google, Microsoft, OpenAI, Anthropic, and Meta are paying influencers $400K–$600K each to promote AI on Instagram and YouTube. AI platforms spent $1 billion on digital ads in 2025 — up 126%. Google and Microsoft’s AI ad spending: +495% in January alone. Anthropic’s running Super Bowl ads. OpenAI’s flying creators to private events.

Making money, positive free cash flow, dividends are not a bad thing ..

If AI is that good, marketing extravanganza? Competition too hot? Where is this going ... same place US foreign policy hot air? LOL

The bit about Oil, gives you an idea of how warped his mind is ....when the Oil price goes up (he is actually right, it is going up), ...We make a lot of money...(who makes the money?)... not the ones who pay for the war LOL ... and unless he or his family and/or friends? are packed to the rafters with gold, he won’t make a mention of what has happened before when Oil price actually does go up, in the same old crisis.

His world view is so non sensical, it is hard to believe .... and if you had such beliefs, you would not trip, over yourself (or your dementia) telling the world about such beliefs, if you follow the appalling logic, or lack thereof.

If Biden was embarrassing, the US has doubled down ...

back on gold ...Trump has been fabulous for gold, and now he is doubling down, blowing Iran up, the price of oil up, inflation up, logistics costs up and so on ...the POG at the moment makes as much sense as he does ... well, it does to a degree ....

The true "takeover" of price discovery for gold occurred as the global financial system became increasingly digitized, and this is in the 1990's

Trading volume on the COMEX began to dwarf the physical turnover in London.

Today, for every ounce of physical gold that moves in London, hundreds of ounces of "paper gold" are traded on the COMEX.

Because the COMEX is open during high-liquidity hours and offers instant electronic execution, the "spot price" seen on tickers globally is almost always derived from the front-month COMEX futures price, which the London physical market then follows.

So the POG is the paper price of gold set by the COMEX traders, not the physical demand....so how long the paper can set the trend will remain to be seen...I think you will see a reversion to history (so to speak) when the paper guys are set,

U.S. GDP growth slowed sharply in the fourth quarter, expanding just 0.7%, while inflation pressures remain stubborn and trending up...real productivity is down or shaky, the Strait of Hormuz (where 20% of global oil passes) is virtually closed, oil production infrastructure is being blown up..the US has been shown to be losing the war and paying $1b a day to lose it....and so on ...

So good luck to those that think the US$ is going to be the saviour of the investment world...

"Velly interesting times" as my Chinese friends say ....

the gnome

AND WHAT HAPPENED IN THE FIRST OIL CRISIS TO THE PRICE OF GOLD ...

The "First Oil Crisis" (1973–1974) was a watershed moment for gold. It wasn't just a price increase; it was the first major test of gold as a free-floating asset following the collapse of the Bretton Woods System just two years prior.

When the OPEC embargo began in October 1973, gold reacted violently to the sudden quadrupling of oil prices and the resulting global economic shock.

The Price Surge (1973–1974)

Before the embargo, gold was trading around $90–$100 per ounce. By the time the crisis peaked and the embargo was lifted in early 1974, the price had nearly doubled.

Key Drivers of the Gold Spike

The relationship between gold and oil during this period was driven by three main "shocks":

The Inflation Shock: As oil prices quadrupled, inflation in the U.S. jumped from 3.4% in 1972 to over 11% by 1974. Investors fled to gold to protect their wealth from the rapidly devaluing dollar.

The Monetary Shock: Because the U.S. had recently ended the gold standard (1971), there was no "ceiling" on the price. For the first time in modern history, the market—not the government—determined what gold was worth during a global crisis.

The Recessional Shock: The oil embargo triggered a global recession and a massive stock market crash (the 1973–1974 bear market). Gold became the primary "safe haven" as equities tumbled.

The "Petrodollar" Connection

During this crisis, a direct correlation emerged between oil and gold that persists to this day. Oil-producing nations in the Middle East saw an unprecedented influx of "petrodollars." Much of this wealth was cycled back into the gold market to diversify away from the U.S. dollar, creating a massive new source of demand.

Comparison: First vs. Second Crisis

While the First Oil Crisis saw gold double ($90 to $180), the Second Oil Crisis (1979) was much more explosive, with gold nearly quadrupling ($220 to $850). The first crisis laid the groundwork by proving that gold was the go-to asset when energy costs destabilized the global economy.

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